Apartments - The Path To Real Estate Wealth

Look at it this way. Did you get attracted to real estate by the idea of being a landlord, or a project manager who fixes properties up. Not likely. Real estate looked really good to you because it seemed like it was a way to make a lot of money reasonably quickly, that you could actually understand.

Sure there’s nothing complicated about the general concept; you buy cheap, renovate, and sell high. When you get in the saddle though there are a lot of choices to make. Like, what particular real estate niche are you going to do. Rehabbing houses? Owning and managing mobile home parks? Flipping notes? Flipping houses? Maybe owning commercial property like strip malls, or office buildings? The list goes on.

Which is going to be your vehicle? Which will you specialize in, if you specialize at all?

When you do choose one as your wealth vehicle, you discover there is a lot of knowledge to master, a lot to be good at.

Given this is the case it’s no mystery many investors lose focus and end up making a lot less money from their real estate endeavors than they want. Or if they do make some money they work hard for it. Not what they signed on for.

There are many ways to profit in real estate, but when you beak it down and look at what gives you the greatest leverage to make the most money, with the least risk, taking the least amount of your time to do it, nothing comes close to apartment buildings.

When you put apartments side by side with other real estate profit vehicles, they really don’t hold a candle to apartments. Especially the most popular; houses.

Flipping houses is very popular. There are TV reality shows about it, everyone wants to do it. On the face of it, it’s very simple, but it’s massively over-exposed and as a result wickedly competitive.

Try flipping apartments. Wait … can you even do that?

Of course you can, it’s real estate just like houses are. And what would you rather make; $5,000 from wholesaling a house, or $50,000 from wholesaling an apartment?

Tough choice.

But that’s only the beginning. When you hold apartments for the longer term it gets even better. By their nature apartment buildings are multi-family properties, so unlike houses apartments have multiple families getting up and going to work each day to earn money to pay the rent. These multiple families in the one building create one of the greatest benefits of apartments … economies of scale.

Because your property expenses, and your mortgage are spread out over multiple sources of income from your tenants, the per unit cost of each ends up being lower. So when combined, your multi-unit building generates more income per dollar of mortgage debt (and fixed expense) on the property than a house every could. And the more units in the building the greater you economies of scale.

As a result apartments generate more net income each month than individual houses can ever produce. And because there is much more gross income being produced by an individual apartment building, there is money available to hire professional property management to manage the building.

This is where houses just don’t compare any more. Once you have 10 or more houses, even though they may be lease-optioned out to tenant-buyers, you don’t have a life any more. The rents you collect from your houses only just covers your mortgages, taxes and insurance, let alone having any left to pay a manager. You are the landlord to those houses and that is that.

And what happens when you have a vacancy in one of your houses? It’s you on the hook for 100% of the mortgage payment until you get another tenant-buyer in the house.

Fun.

In your apartment building, a vacancy means your gross income drops a little that month, and your net positive cashflow will be a little less, but it is your property manager’s job to fill the vacancy.

When you invest in apartments you are truly an “investor”, not a landlord. You manage your managers to increase the income of the property as time goes by.

Another key difference between houses and apartments is how they are valued. Houses are valued by comparable properties, apartments are valued by the income they produce. As you rehab units, fill vacancies, raise rents, you increase the value.

Over time, managing your apartments for maximum income you can increase the value of the property 2-3 times within a few years; something that is rarely possible with a rental house. Besides, which check would you rather receive; $50,000 after 6 years when your tenant-buyer finally cashes you out, or $500,000 after 18 months after getting all your units rehabbed, rents raised, and vacancies filled.

When you take the time to seriously look at the benefits of investing apartments, it’s hard to understand why anyone would even want to buy a house … even one time.

The reason is, of course, fear. A beginning investor can get their head around a house, it’s very familiar. The numbers are comfortable.

But seeing themselves as the owner of a building that is worth in excess of one million dollars … “well, that sounds a little dangerous”. It’s hard for a beginning investor to identify with. The numbers are not comfortable.

The secret is though, apartment investing is less competitive, lower risk, and dare I say it, easier than buying houses. The same work you would apply to buying a house, applied to an apartment building nets you 10, 20, 50 times more.

Put your misconceptions aside, apartments truly are the surest way to real estate wealth.

7 Big Reasons To Invest In Pre-Foreclosures

Looking for an "in" to real estate investing?

Working a nine to five job swapping time for money can be incredibly dispiriting. After the futility of it all hits home, it's all you can do to limit the number of home business opportunities you investigate to twenty per week.

One of the more compelling home business opportunities is real estate investing. Real estate investing is the perennial wealth builder, and the transition from working a job to achieving wealth through real estate investing is becoming increasingly well documented.

You've probably thought about investing in real state yourself but you've not gone for it because you thought you needed tens of thousands in savings for a down payment, and perfect credit along with strong banking relationships.

Well, you can get all that together if you want. It doesn't hurt to have those resources. But it's not necessary to have a huge pile of cash and perfect credit to buy a house cheap and resell it for a profit.

It's especially not necessary in the preforeclosure market. Preforeclosures are houses in the default phase of foreclosure; where the bank has filed initial foreclosure papers but the Sheriff Sale or Trustee Sale where the bank auctions off the property, or repossesses it if no-one buys at the auction, hasn't occurred yet.

Buying during the preforeclosure period is one of the best ways for anyone to get involved in real estate investing. With little more than a few hundred dollars and some specialized knowledge you can buy a house at a substantial discount and resell it retail picking up a five figure profit check in the process.

Don't believe it?

Well, let me give you seven reasons why it's true:

1) When people are in default on their mortgage they have stopped making payments to the bank. So when you are negotiating with the seller, and the bank, right up until the point where you buy, no-one is making the payments. For novice investors worried about holding costs this is a huge advantage.

2) Preforeclosures are a very well defined niche market. One of the most deadly mistakes rookie investors make is trying to be a jack-of-all-trades, going after any and everything they can lay their eyes on. The result of this lack of focus is they are soon back at their jobs. By being a very defined market, preforeclosures allow you to develop focused marketing campaigns and standardized processes to get deals completed and closed.

3) One of the fundamentals of real estate investing is contacting and talking "only" to motivated sellers, and avoiding all the rest. Sellers in preforeclosure are some of the most motivated sellers you will find. Their world has been turned upside-down, they are about to lose their house, and their motivation is such that they just want out of the house and the bank off their back. By buying houses from people in preforeclosure, creating 30%+ equity spreads on houses often in good condition is not a difficult thing to do.

4) Buying houses in preforeclosure enables you to create unusually large equity spreads. Recent economic uncertainty has caused a lot of foreclosures, and rising rates will cause more in coming years. If banks had to take back all of the properties that went into foreclosure the FDIC would shut them down. They know this, so they try not to take properties back they don't have to. By requesting the Lender discount what is owed on their payoff, large spreads of equity can be created on houses that are totally "maxed out" with loans. This can't be done on loans not in default.

5) Because Lenders are under pressure to liquidate bad loans rather than take the property back, large discounts can be negotiated. After becoming familiar with the issues that cause Lenders to discount, larger and larger discounts can be achieved as you hone your negotiating skills.

6) If your plan is to buy and hold the property, having good enough credit and financials to get bank financing excludes a great many people from getting into real estate. On top of that, if you do get a bank loan, your financial exposure is at it's maximum when everything is in your own name and personally guaranteed. Buying houses in preforeclosure allows you to simply take over the existing financing already in place. No qualifying needed. You can take title to the property in a Land Trust, begin making payments on the existing mortgage(s), and still get all the tax advantages, appreciation, depreciation without any of the risk of being personally liable for the mortgage and the property.

7) If you have ever bid at auction for property at the courthouse steps, you are only too aware of the competition breathing down your neck. Lots of mind games. The 40 thieves are talking trash to you trying to get you not to bid. If you are Larry Bird, no problem. Make sure you have $500K on your credit line though. However if you are not the 'Bird' and you don't pack half a mil' of credit, you can sneak in and avoid this NBA showdown by buying the house during the preforeclosure period... before the auction.

Make no mistake about it, there are many ways to make healthy profits in real estate investing. But when you look at how easy preforeclosure makes it to buy houses cheap and resell for five figure profit checks, all the while helping people out of agonizing life circumstances, it makes little sense to pursue real estate investing any other way.

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Ben Innes-Ker is a father, best-selling author, and real estate investing warrior. He has developed the "Foreclosure Investing Letter" to help real estate entrepreneurs buy foreclosures with less effort and higher profits. To receive your 5 part mini-course that reveals real estate investing basics anyone can use to achieve this too, visit: http://www.the-foreclosure-investing-letter.com/
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Foreclosure Real Estate Investing - Now is the time!

With foreclosure rates approaching historic highs, there has never been a better time for those considering real estate investing to get started. Real estate investing has always a highly profitable business opportunity for those wanting to supplement their income, but specializing in foreclosures is proving to be most profitable with the least risk attached.

The weak economy since 911, has left the Federal Reserve no choice but to set the fed funds rate very low. The ready supply of cheap money has, as it always does, sent the mortgage industry into overdrive. As a result there has been higher than usual levels a regular bank and mortgage lending, but spectacular levels of sub-prime and home equity lending.

Inevitably though, the economy recovers, as it is now, and those borrowers who bought homes with adjustable rates who only able to qualify due to rates being artificially low, quickly see their payment rise beyond their ability to pay and get behind on their payments.

Sub-prime and home equity loans don't wait for the economy to recover, the crushing debt load they impose on their borrowers begins on day one after closing. Deft marketing by lenders pulls the borrowers in with the allure of lots of easy cash, but the reality of the bargain usually only presents itself to borrowers after the deed has been done.

Mortgage lending is always a math game, and lenders always expect some loans they make to go bad. However, the high availability of lending funds and the loosened standards lenders have given their underwriters over the last few years is producung some of the highest foreclosure rates in 15 years.

For real estate investors this is a unique opportunity.